Is Iran Serious about a Deal?

It is nuclear negotiating season and the P5+1 and Iran are once again exciting the foreign policy community with hints of what could be. Many see these talks as a turning point in Iran’s relations with the West and a clear signal that thinking in Tehran has changed. But critics, who are weary of Iran’s intentions, have warned against compromise, dismissing Iran’s diplomatic overtures as little more than a calculated attempt to buy time.

What has brought Iran to this point? While opinions differ on Iran’s end game, its short-term goal is apparent: sanctions relief. Since increasingly severe sanctions began to hit in 2010, Iran’s oil production, oil export revenue, and gross domestic product have all declined. Banking sanctions have made it nearly impossible for certain Iranian industries to do business outside of the country. International pressure has forced traditional partners like United Arab Emirates to drastically reduce economic interaction with Tehran and cut ties with numerous Iranian businesses. Petroleum, the pillar of Iran’s “resistance” economy, is now being sold at discounted rates, or traded to India and China for rupees and renminbi instead of U.S. dollars.

But sanctions aren’t the whole story. Several factors have combined to weaken Iran and cause a shift in its strategic calculus. The most significant challenges (outside of sanctions) facing Iran have been caused by the Arab Spring and its political and strategic reverberations in the Middle East. Iran has witnessed popular, pro-democracy uprisings—not unlike those that followed its 2009 presidential election—topple longstanding regimes with the support of Western powers. Iran’s closest ally, Bashar al-Assad, has been engulfed in a civil war fueled by outside financial and materiel support. In backing Assad, Iran has found itself fighting a war against both Syria’s Sunni population and their supporters, from Saudi Arabia and Qatar to Al Qaeda, the Muslim Brotherhood, and Hamas—Iran’s erstwhile ally. This has magnified the already stark sectarian dimensions of Syria’s civil war and put Iran firmly in opposition to its Sunni neighbors.

Syria’s civil war has also put Iran’s chief strategic assets in jeopardy. Iran has long considered the United States and Israel to be the biggest threats to its theocratic system. To deter an attack or overt regime change efforts, Iran has partly relied on its ability target Israel by proxy. Its relationships with Syria, Hezbollah, Hamas, and other Palestinian organizations, have been Iran’s main (non-conventional) points of leverage. If Iran were to lose its Syrian ally, the main conduit for its support to Hezbollah would be lost. Backing from Damascus has enabled Hezbollah to maintain a dominant position in Lebanon, which would likewise be put at risk should Assad fall. The war has compromised Iran’s ties to Hamas and likely degraded Tehran’s influence in Gaza as a result. Even if Assad should stay in power, he will be severely weakened and his strategic value for Iran will have been eroded.

Shared antipathy for Iran has pushed Saudi Arabia and Israel closer together. Saudi Arabia sees Iran as an interloper in Arab affairs with a strongly pro-Shiite agenda. It points to ongoing unrest in Bahrain, protests among Shiite youth in Saudi Arabia, the marginalization of Sunnis in Iraq, and the Syrian conflict as direct outgrowths of this agenda. Countering Iranian influence has become a focal point in Riyadh’s strategic policy and might have led it to a covert working relationship with Tel Aviv. At least from Iran’s perspective, Saudi Arabia and Israel are seen as fellow conspirators in a number of efforts aimed at undermining its security. Iran has hinted at a Saudi role in the string of assassinations of its nuclear scientists in 2010-12—incidents it directly blamed on Israel. It has also suggested that Saudi Arabia and Israel have both aided Sunni Islamist insurgents in Iran’s largely Baluch southeastern province, and supported other anti-regime organizations like the Mojahedin-e Khalq.

Regardless of the facts, Iran perceives Saudi Arabia and Israel to be actively engaged in covert operations against it. Iran has responded with covert operations of its own. The best known of these have been glaring failures: Iran’s plot to assassinate the Saudi ambassador to the United States in Washington D.C., which was discovered early in the planning process by federal agents; and the failed bombings of Israeli diplomatic targets in Tbilisi, New Delhi, and Bangkok (an operation exposed after an accidental explosion in an apartment led to the arrests of three Iranian operatives). Iranian operatives have also been connected to a plot against Israeli targets in Kenya and the murder of a Saudi diplomat in Karachi.

Iran is thus facing a bleak reality: it has become increasingly alienated in the region, its strategic investments in the Levant and main sources of leverage against Israel are at risk, it faces an escalating covert conflict with Saudi Arabia and Israel, its reputation as an effective covert actor has been tarnished, and its economy is in shambles with no clear solution except relief from sanctions. Meanwhile, Iran remains vulnerable to domestic unrest, which, given the experience of countries such as Libya, could become a casus belli for foreign intervention against the regime.

It is likely that the election of Hassan Rouhani and the regime’s initial backing of his diplomatic overtures are aimed at addressing some of these issues. The election has so far reintroduced hope in Iranian domestic politics and momentarily allayed many of those advocating for greater freedoms. Diplomacy with the West enables Iran to regain agency over its own affairs, and if it results in a solution to its nuclear dilemma and the end of severe sanctions, then Iran will have emerged from a vexing period largely intact.

The caveat—and there is always a caveat—is that it is unclear to what extent hardliners in Iran (especially regime heavyweights in the Iranian Revolutionary Guard Corps (IRGC)) are willing to back compromise with the West. Hardliners have been at the forefront of Iranian strategic policy for the last decade and are responsible for their country’s current troubles. That Rouhani’s diplomatic efforts have been able to continue unhindered suggests that there is some degree of buy-in from key hardline stakeholders and especially from the IRGC’s top brass. Yet, if their rhetoric is to be believed, hardliners might not be willing to give in on certain matters that the P5+1 would likely require for a broader deal to end sanctions. Hardliners believe that deterrence against the United States and Israel could still be achieved through a combination of military and covert capabilities. Just as hawks in the United States, France, Israel, and Saudi Arabia might want to scuttle a potential détente between Washington and Tehran, hardliners in Iran could try to play spoiler if their demands are not met.

Try as it may, Iran cannot reengineer the political dynamics of the Middle East. Iran is not likely to reverse course in Syria, and with the political cover provided by Russia, it probably won’t need to. Iran’s tensions with Saudi Arabia and Israel will likely continue, and perhaps could even grow should they remain opposed to compromise between the P5+1 and Tehran. Thus, the most obvious path to alleviate the bulk of this pressure is for Iran to cut a deal with the United States that ends sanctions. Making such an agreement would not only restore viability to Iran’s economy, but also eliminate (or at least reduce) the potential military threat posed by the United States.

In other words, Iran is probably serious and willing to compromise (to an extent). Sanctions have hurt and it is clear that Iran wants sanctions relief. But, it would be an oversimplification to suggest that sanctions alone brought Iran to this point. The impact of sanctions cannot be disaggregated from the impact of the Arab Spring. Rather, it has been the confluence of these pressures that have made Iran feel assailed on all fronts and led to a shift in its strategic thinking. However, the timeline to cut a deal is finite, and if negotiations drag on more opportunity will arise for hardliners in Iran and other third parties to undercut diplomatic efforts. Thus, if a deal is to be made, it behooves Iran and the P5+1 to move quickly and make it happen.

Afshon Ostovar is a senior analyst at CNA and the author of a forthcoming report on the impact of sanctions and the Arab Spring on Iranian strategy. He is a contributor at War on the Rocks.